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I’m looking at a triplex – all units are one bedroom, one bathroom. All are currently getting rented out for $1,000/month. Market rent says they’re all $1,300/month. For an FHA mortgage, I would have to live in one unit, right? So, to understand FHA eligibility, do I base my calculations on all three units meeting the mortgage payment OR is it two units because I’m living in one unit? And which rent numbers do I use: the market rent or the actual rent?


Yes, you are correct about having to live in one unit for FHA. Your next questions are based on the self-sufficiency test for FHA Mortgages.

Self Sufficiency Test: 75% of the total market rent (aka pro forma – see below for how to calculate this) for all the units has to be more than the total monthly mortgage payment. That total payment includes: principal, interest, taxes, mortgage insurance (PMI) and any other insurance  (like homeowners insurance).

If your scenario passes this test, you are eligible for an FHA loan for this property.

More Info on Calculations for the FHA Self-Sufficiency Test

Calculating Rental Income aka Net Operating Income (NOI): Part of qualifying for a FHA loan involves FHA-approved appraiser calculating the rental income by assessing the current local market rates. These certified appraisers are well versed in the standards of the U.S. Department of Housing and Urban Development (HUD). 

The test requires that 75% of the property’s Net Operating Income meets or exceeds the mortgage amount…but keep in mind that the Net Operating Income is not just the market rents. The “net” in the NOI value means that current local vacancy rates are factored in…which reduces the NOI.

Calculating the Mortgage Payment for the FHA Self-Sufficiency Test: The mortgage payment used in this calculation considers “PITI” which is:
Principal + Interest + Taxes + Insurance

Here, the certified appraiser calculates the estimated monthly total mortgage cost to compare against the rental income. The insurance
amount will include the cost of mortgage insurance and homeowner’s insurance.

How Strict is the FHA Self-Sufficiency Test when Getting a Mortgage?

Safeguards and requirements are constantly being updated…especially since the last housing crash. The FHA wants all lending decisions made according to set standards, so don’t expect much leniency.

Also don’t just focus on the the self-sufficiency test because other key qualifications apply.

The property itself must also meet various minimum standards regarding condition and livability. Is the property in need of major repairs? The property inspection evaluates critical systems, including electrical, water, and sewage. Other possible deal-breakers include evidence of structural problems, water accumulation around the foundation, the presence of termites or lead paint, and more.

Then there are the borrower specific qualifications that we cover in detail here: FHA Program Requirements.

Considering FHA financing for a property purchase? Contact our professional team for assistance OR check out our simple eval process where you can choose whether you want to: get real rates specific for your scenario, see how much home you can afford, get pre-approved, or quickly submit your contact info so we can get back in touch.


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Los Angeles, CA 90013
(310) 340-6606


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The Turnkey Foundation, Inc. d/b/a Arbor Financial Group is an Equal Housing Lender. In all jurisdictions, the principal {NMLS: 236669} licensed location is 2932 Daimler Street, Santa Ana, CA, 92705. {Julie Aragon MLO #250691}